Iridium Communications (IRDM) is a global provider of mobile voice and data communications offerings. In a slew of major positives this week, Iridium delivered better-than-expected Q3 2021 numbers, raised its 2021 outlook, and received an upgrade in rating from BWS Financial.
Let’s have a look at Iridium’s Q3 financials, as well as what has changed in its key risk factors that investors should know.
Revenue increased 7% year-over-year to $162.2 million, outperforming estimates by $8.4 million. The bulk of this increase came from a 9% growth in Service revenue, which chiefly consists of recurring revenue from the company’s subscriber base.
Furthermore, improvements in operating profit and lower net interest expenses helped Iridium narrow its net loss per share to $0.02 as compared to net loss per share of $0.03 a year ago, and beat analysts’ estimates by $0.01. (See Insiders’ Hot Stocks on TipRanks)
Boosted by growth in commercial IoT customers, Iridium’s total billable subscriber base has increased 18% over the prior year to 1.7 million.
Matt Desch, CEO of Iridium, commented, “With the flood of new capital making its way into the space industry, Iridium continues to distinguish itself as a leader in satellite communications by leveraging its unique network and spectrum position to connect people, vehicles, and assets on the move.
“We continue to generate stronger free cash flow as we attract new subscribers to our network, which sets us up well as we plan for 2022.”
Buoyed by robust demand and momentum in subscriber numbers, Iridium increased its guidance for full-year 2021. It expects Service revenue growth to be in the range of 5% to 6%, and operational EBITDA to land at around $375 million.
On October 20, BWS Financial analyst Hamed Khorsand increased the stock’s rating to Buy from Hold, and increased the price target to $60 from $37. Khorsand views Iridium favorably on account of its growing subscriber base which he expects will also help Iridium reduce leverage.
Risk Factors
According to the new TipRanks Risk Factors tool, Iridium’s main risk category is Finance & Corporate, accounting for 26% of the total 47 risks identified. In the recent Q3 report, the company changed one key risk factor under the Production category.
Iridium noted that it relies on a limited number of key vendors for its supply of equipment, components, and services. If iridium loses any supplier or any of its suppliers witness shortages then the company may have to incur extra costs, as well as experience delays in production and delivery of its products.
Compared to a sector average Production risk factor of 15%, Iridium’s is at 11%.
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